How to Claim VAT from Other EU Member States: A Complete Guide

How to Claim VAT from Other EU Member States: A Complete Guide

General Guides Tax and Legal
31 January 2025

Understanding VAT in the EU

Generally, when purchasing services within the EU as a VAT-registered business, providing your VAT number ensures that invoices are issued with reverse-charge VAT (0% VAT), shifting the tax responsibility to the recipient. However, in some cases, this does not occur or is not possible, meaning businesses must submit a separate VAT refund request to reclaim the VAT paid. This blog post will explain how the VAT refund process works and what businesses need to know to successfully reclaim VAT from other EU member states.

Understanding the VAT Refund Process

Legal Framework

The VAT refund process is governed by:

  • Estonian VAT Act (KMS) § 35
  • Council Directive 2008/9/EC (applies to VAT refunds within the EU)
  • Council Directive 86/560/EEC (applies to VAT refunds from non-EU countries)

These regulations outline the conditions under which businesses can claim VAT refunds on expenses incurred in other EU member states.

Who Can Apply for a VAT Refund?

Businesses purchasing goods and services in another EU country and paying local VAT can reclaim it, provided that:

  • The expenses are related to taxable business activities.
  • The VAT was paid in an EU member state where the company does not have a local VAT registration.
  • The refund request is submitted through the company’s home country tax authority (e-MTA in Estonia).

Key Deadlines and Submission Process

  • VAT refund applications must be submitted by September 30th of the year following the refund period.
  • The refund period must be between 3 months and 1 year (except in cases where the claim covers the last months of a calendar year).

Minimum Refund Amounts

  • €50 per member state per calendar year.
  • €400 for shorter refund periods (less than a year).

Country-Specific VAT Rules and Limitations

While the principles of VAT refunds are consistent across the EU, the specific rules can vary. These differences are based on national tax laws, and businesses must consider these before filing a claim. Some key variations include:

  • Company Car Expenses: Some countries impose restrictions on VAT refunds for fuel, leasing, or car-related costs.
  • Goods Purchases: VAT refunds may not be available for certain types of goods.
  • Accommodation and Catering: Some member states do not offer full refunds on VAT paid for hotels and meals.

To ensure compliance, businesses should verify the VAT rules in the country where they are claiming a refund.

Documentation and Invoice Requirements

To successfully claim a VAT refund, businesses must provide correct and complete invoices. Each invoice should contain essential details such as:

  • Seller and buyer information
  • Invoice number and date
  • VAT rate and amount paid

Additionally, some member states require scanned copies of invoices when:

  • The invoice amount is at least €1000.
  • Fuel invoices exceed €250.

Properly classifying expenses in accounting systems helps businesses prepare accurate refund claims at the end of the financial year.

Processing Time and Refund Decisions

After submission, the tax authority of the country where VAT was paid will review the application. The processing timeline is as follows:

  • 4 months if no additional information is required.
  • 6 months if further details are requested.
  • 8 months for complex cases needing additional clarification.

Once approved, the VAT refund must be transferred within 10 working days. If delays occur due to the tax authority, interest may be applied to the refund amount.

Using Authorized Representatives

Businesses can appoint authorized representatives to submit VAT refund applications on their behalf. These representatives must have the necessary agreements in place and use Estonia’s e-MTA system for submission.

Final Tips for a Successful VAT Refund Claim

  1. Ensure invoices are correctly formatted and contain all necessary details.
  2. Submit refund applications on time to avoid missing deadlines.
  3. Use e-MTA to track and manage VAT refund claims efficiently.
  4. Consider using a VAT expert or representative for complex claims.

About Us

At Comistar Estonia, we can help in assisting businesses with such application, including EU VAT refund and other corporate services. Our team ensures that your VAT claims are submitted correctly and efficiently, maximizing your refunds while minimizing administrative hassle.

Comistar Estonia is operated by Premium Accounting OÜ, holding the Estonian Financial Intelligence Unit (EFIU) operating license FIU000408 for trust management and corporate services.

We provide comprehensive corporate services, including:

  • Company establishment and management
  • Tax, accounting, and legal consulting
  • International business services

As a member of INPACT Global, an alliance of accounting firms, we have been operating since 2013. We have also been part of the e-Residency program since 2017 and are members of several key organizations, including:

  • Estonian Chamber of Commerce and Industry
  • Estonian Taxpayers' Association
  • Association of Estonian Accountants

Additionally, our services are covered by professional liability insurance for accounting.

Conclusion

Reclaiming VAT from other EU member states can provide significant cost savings for businesses engaged in cross-border trade. By understanding the regulations, meeting submission deadlines, and ensuring compliance with country-specific VAT rules, companies can streamline the refund process and recover VAT efficiently. Always stay informed about local tax regulations to optimize your business’s VAT recovery strategy.